E-commerce is booming and and with the U.S. e-commerce market expected to reach over $1.1 trillion in sales in 2023, and Amazon accounting for 37.8% of e-commerce sales, it’s important to understand how to navigate challenges to stay ahead of competition and keep customers happy.
Running a successful e-commerce business in today's fast-paced world requires meticulous planning, especially when it comes to handling the unpredictable - natural disasters and seasonal delays.
When it comes to e-commerce logistics, the global market is expected to grow from $10,712.4 billion in 2023 to $14,081.64 billion by 2028 at a 5.6% compound annual growth rate (CAGR).
Generally, online businesses should stay on top of their e-commerce logistics to ensure undisrupted operations, improve customer satisfaction, and maintain a consistent cash flow. But what if a natural disaster strikes, causing delays in operations?
Fret not; in this article, we'll delve into eight invaluable strategies that can help you prepare your order fulfillment process for the unexpected, ensuring your e-commerce venture weathers the storm - both figuratively and literally.
What is logistics?
If you’re an experienced e-commerce business owner you’ll hopefully already know what logistics is, but if you’re new to e-commerce, logistics entails managing the flow of goods and services from the partnered suppliers to the end customers.
It involves long-term planning, effective demand forecasting, and strategic decision-making to streamline the supply chain. Logistics activities include the following:
Material Procurement - obtaining raw materials from partnered suppliers used for production
Inventory Management - ordering, keeping, using, and selling inventory, from raw materials to process components to finished products
Warehouse Management - storing and regulating goods and items in a facility after obtaining materials from suppliers and before delivering products to customers
Order Fulfillment - processing orders and coordinating with other departments to ensure products get delivered to customers
Product Delivery - safely and promptly delivering the correct products to the customers’ doorsteps
However, one critical function of logistics is risk management. For one, you must plan and prepare for potential delays due to natural disasters or seasonal delays such as snow and ice.
But how? We spoke to one of our key logistics partners within Amazon to find out how they prepare for natural disasters and delays.
Further reading: How to Design Your Warehouse Layout for Maximum Efficiency
Amazon Freight has a specialist team in place
The team at Amazon Freight says: “Transportation disruptions are inevitable. Blizzards move in, roads shut down, trucks get flat tires. At Amazon Freight, we use technology to plan out our routes in advance to mitigate the impact of such occurrences for our customers. But, when they do happen, we have a team in place to keep our customers’ shipments flowing. It’s called the Amazon Freight Disruption Management team, and their role is to get ahead of issues but also react quickly when they do happen.
That starts with preparedness. If the disruption is foreseen, such as a hurricane moving in, they will communicate with customers to start to plan ahead. That could be finding alternative routes or moving more shipments out earlier. In situations where the disruption is unexpected, such as a mechanical issue, they work closely with drivers and carriers to quickly find a resolution. At the end of the day, their job is to ensure safe, swift, and reliable shipping for all of Amazon Freight’s customers.”
Want to try shipping with Amazon Freight? Create an account here and start getting quotes immediately.
8 Ways you can prepare your e-commerce business for natural disasters and seasonal delays
So now you’ve heard how Amazon does it. But how can you prepare your own business and order fulfillment process for natural disasters and delays? Well, we have eight tips to help you on the right path!
1. Define Your Logistics Goals and Key Metrics
Before handling natural disasters and delays, your journey begins by defining your logistics goals and establishing key metrics to measure success.
Setting these objectives forms the foundation for creating a resilient fulfillment process. Common logistics goals for e-commerce businesses include:
Timely and Accurate Order Fulfillment - The ability to process, pack, and ship products to customers promptly.
Optimized Inventory Management - Maintaining stock levels to prevent stockouts and overstocking.
Efficient Warehouse Management - Ensuring product safety and quality within your storage facilities.
Cost-effective Transportation - Streamlining shipping operations to reduce costs and meet delivery deadlines.
Visible Supply Chain - Tracking the flow of goods and services to prevent disruptions.
High Customer Satisfaction - Ensuring customers are delighted with products and services.
Increased Business Profitability - Boosting your profits to achieve e-commerce success.
These logistics objectives are commonly gauged by the following key performance indicators:
Service Efficiency and Productivity: You seek to optimize your e-commerce operations by providing efficient services and delivering productive outputs regularly.
Quality Standards and Business Compliance: Meeting quality standards and adhering to legal and regulatory requirements.
Customer Satisfaction: The ultimate goal is to make customers happy and fully satisfied with your online products and e-commerce services.
2. Conduct Risk Assessment and Identify Potential Disruptions
A thorough risk assessment is crucial to understand potential disruptions that might affect your e-commerce business. Start by identifying natural disasters that might affect your operations, depending on your location.
These include hurricanes, tropical storms, cyclones, floods, landslides, wildfires, winter storms, droughts, earthquakes, tsunamis, and volcanic eruptions.
These natural disasters can cause disruptions across your supply chain, warehouses, transportation networks, communication systems, data integrity, payment processing, inventory, equipment, and even employee well-being.
Jonathan Elster, CEO at EcomHalo, recommends performing risk assessments before creating contingency plans. “You must first identify natural disasters that can disrupt your ecommerce operations. From there, you must dig deeper into the magnitude of such disruptions. Then and only then can you develop effective planning, preparation, and mitigation strategies.”
3. Set Contingency Plans in Place
At this point, you can now set your contingency plans in place. These plans encompass a range of measures designed to help your e-commerce business respond effectively to unforeseen events. Contingency plans should cover the following areas:
Disaster Response Teams: Form teams with defined roles and responsibilities to take action during natural disasters.
Communication Protocols: Establish guidelines for efficient communication across departments during emergencies.
Facility Preparedness: Ensure that your physical facilities, such as warehouses, are built to withstand natural disasters.
Supply Chain Management: Guarantee a continuous flow within your supply chain, identify backup suppliers, and have alternatives for shipping providers.
Inventory Management: Monitor and regulate stock levels, even during a disaster, to meet consumer demands.
Transportation and Logistics: Keep a close eye on weather conditions, enabling real-time adjustments and identifying alternative routes.
Jack Underwood, CEO and Co-Founder at Circuit, advised brainstorming with your team. “Emergencies like natural disasters require your team to understand the situations and take proper actions. If possible, consult business experts who can review if your steps will be safe and effective for your e-commerce operations.”
4. Create a Disaster Response Team
After setting your contingency plans, you can establish your disaster response team like Amazon Freight’s.
This team must consist of experts who understand the impact of a natural disaster and know how to proceed with your e-commerce operations.
Their roles are highly critical as they have to be able to perform the following:
Implementing Contingency Plans: Activating contingency measures during real emergencies.
Employee and Customer Well-being: Ensuring the safety and well-being of employees and customers.
Communication and Coordination: Maintaining consistent communication with all involved stakeholders, coordinating with departments to maintain operations, and informing customers about order statuses and potential delays.
Assessing Inventory Levels: Evaluating the status of inventory and identifying compromised stock.
Data Backup and Recovery: Ensuring the backup and recovery of crucial data.
Cash Flow Management: Managing cash flow even during disasters.
Resource Allocation: Deploying necessary resources, including personnel, supplies, and equipment based on requirements.
5. Perform Effective Forecasting and Monitoring
Forecasting and monitoring are almost always a part of e-commerce logistics operations. However, you must focus more on these two functions during disruptions.
Forecast ahead and ensure you perform constant monitoring during seasonal demands, price fluctuations, and natural disasters. Here’s what you need to do:
Supply and Demand Forecasting: If you were to predict your e-commerce supply and demand, consider forecasting the weather as well. This is easier to do during seasons like winter for snow storms, and summer for hurricanes, depending on where you’re located. Should there be storms or floods in your market area, examine your supply chain and consumer needs. Then, you can prepare for what lies ahead.
Supply Chain Monitoring: While you’re at it, track your e-commerce supply chain. Ask these crucial questions: Will you have enough stocks during a natural disaster? Will your goods and items be safe in the warehouse? Will there be obstacles in shipping your products? Will you need freight factoring to maintain your cash flow? Regular monitoring is key to answering all these questions.
6. Establish Communication Channels and Protocols
Effective communication is almost always the key to business success.
This notion also applies to the e-commerce industry, especially during an emergency due to a natural disaster. Invest in stable channels and ensure your disaster response team strictly follows the communication protocols.
Likewise, they must provide robust customer support to boost e-commerce sales amid a natural disaster.
Michael Power, CMO at DTF Transfers, suggests investing in digital tools and communications technology. “Click-and-order stores usually communicate with vendors and transact with customers digitally. As such, you must ensure you have state-of-the-art technologies to optimize your e-commerce operations and make everything easy for all your stakeholders.”
7. Leverage Digital Tools and Technology
Technology has become a game-changer in today’s business landscape. This idea is especially true for e-commerce, where online businesses interact with customers digitally. Digital tools and technology can significantly help in times of natural disasters. Here’s how you leverage them:
Artificial Intelligence: Capitalize on supply chain and inventory management software powered by AI for practical data analysis and forecasting. You can predict your supply and demand in times of natural disaster.
Automation: Automate your shipping, including inventory and warehouse operations, to reduce manual work and accelerate processes. Digital tools can speed up your e-commerce operations, even during a natural disaster.
Client Relationship Management: Use a centralized and unified platform like CRM to manage client communication and collaboration all in one place. Despite the disruptions caused by a natural disaster, you can continue to do business with vendors and transact with customers.
8. Diversify E-commerce Stakeholders
In the e-commerce landscape, you often collaborate with various stakeholders, from suppliers to shipping providers. Partnering with a variety of vendors is a smart strategy, especially in emergencies brought on by natural disasters. When one hand is tied, the other can still function effectively. Consider the following:
Material Suppliers: You probably have a handful of suppliers consistently providing you with raw materials. Consider having local and international suppliers if your budget permits. Should there be a natural disaster in your locality, you can still get supplies from your global partners, or vice versa.
Warehouse Facilities: You might have some fulfillment centers keeping your goods and items. Why not consider having backup warehouses or storage units? Should there be a natural disaster in your area, you can ensure not all your stocks get compromised.
Shipping Providers: Will Ward, Founder of Freight Forwarder, provides a global list of shipping and logistics providers. He says: “You can reach out to and work with other vendors during calamities. Most of these service providers are willing to assist your e-commerce business during difficult times. So, make sure to have flexible contracts.”
Further reading: 11 Things to Consider When Expanding Internationally
Helping your e-commerce business continue operating and fulfilling orders through any disaster
The e-commerce industry is thriving, offering entrepreneurs ample opportunities for business growth and profitability.
However, it's crucial to prepare for both seasonal delays and natural disasters, as these challenges are inevitable.
The best practices detailed in this article will equip you to effectively handle natural disasters and associated delays.
Make sure to identify potential risks and create contingency plans. More importantly, let your disaster response team take prompt action and provide them with the utmost support.
With these strategies in place, you're poised for e-commerce success, ensuring your online store perseveres through any disaster or delay!
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